City: Drilling to bring in tens of millions

Parsley to drill under Hogan Park; other companies also drilling on city property

City Councilman Scott Dufford told the Reporter-Telegram that a deal with Parsley Energy promises to bring in tens of millions of dollars a year for the city of Midland.

City Councilman Scott Dufford told the Reporter-Telegram that a deal with Parsley Energy promises to bring in tens of millions of dollars a year for the city of Midland.

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City Councilman Scott Dufford told the Reporter-Telegram that a deal with Parsley Energy promises to bring in tens of millions of dollars a year for the city of Midland.

City Councilman Scott Dufford told the Reporter-Telegram that a deal with Parsley Energy promises to bring in tens of millions of dollars a year for the city of Midland.

City: Drilling to bring in tens of millions

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The city of Midland is set to reap the rewards of horizontal drilling.

That is how veteran City Councilman Scott Dufford sees it. Dufford told the Reporter-Telegram that a deal with Parsley Energy promises to bring in tens of millions of dollars a year for the city of Midland.

“Literally, we will average between $10 (million) and $30 million a year,” Dufford said. “It will be that way for a while.”

Dufford said the city previously leased “350 net acres” to Double Eagle, which later sold its interests to Parsley. Using “tablecloth economics,” Dufford explained how drilling as many as 18 wells on city property, primarily around Hogan Park, will bring royalty income to the city.

“The math, for the most part, is off the charts,” Dufford said.

Dufford said if Parsley averages 400 barrels a day, that could result in $35 million a year to the city – and that is just money coming in from interests around Hogan Park. Drilling is taking place around Midland International and under parks across the city and that money is shared by the city and airport, he said. Another 500 acres will be leased at airpark as the city will go out for bids next month, Dufford said.

While Parsley appears to be a big player with the drilling that will take place under Hogan Park, it is not alone. Dufford said other companies drilling under city property include Diamondback and Endeavor.

Dufford expects the city will use the money brought in from drilling in three different areas – parks spending, infrastructure spending and property tax relief. He said the guarantee of millions helps offset the higher prices being forced on the community on projects across the city. For instance, the council last week approved the Dennis the Menace Park improvement project despite bids that were more than 50 percent higher than originally estimated.

“This will be a nice windfall for a long time,” Dufford said. “Hopefully, councils in the future will invest it wisely in infrastructure and keeping property taxes at a low rate.”

The city reports collecting $2.133 million in oil and as revenue in 2017 and more than $5 million in 2016. In 2017, more than $1.7 million went into the Airport Fund. In 2016, the city collected $4.94 million in one-time bonuses. Most of that revenue went into the General Fund.

For Dufford, an oilman and the dean of all council representatives, this oil revolution is something he could have never contemplated when he was first elected in 2001. He told the Reporter-Telegram this week that the technology is so new he’s not sure there were any horizontal wells around the area when he was first elected. It was in 2007-09 that the technology accelerated, he said, and today, companies can steer those wells thousands of feet underground, piercing any zone needed to unlock thousands of barrels of oil.

“That has transformed the Permian Basin in to the oil and gas powerhouse it is today,” Dufford said.

And the city soon will be a player in a way no one thought possible less than two decades ago. and with plenty of growth on the horizon, they city will have money to help deal with the heated economy.